India’s passenger vehicle market is gearing up for steady growth, with wholesale sales projected to climb 5-7% in fiscal year 2026. This optimistic outlook, detailed in a recent ICRA report, stems from robust domestic demand, GST rate cuts, and a flurry of exciting new model launches.
January painted a promising picture for the sector. Wholesale dispatches surged 14% month-on-month, fueled by strong consumer appetite that prompted manufacturers to ramp up production. Retail sales also impressed, growing 7% year-on-year to hit impressive volumes, while wholesale figures jumped 12% to nearly 4.5 million units.
The report highlights sustained demand momentum, festive wedding season buying, and fresh model introductions as key drivers behind January’s strong performance across passenger vehicles and two-wheelers. Total vehicle wholesale sales in January rose 6.7% year-on-year, with retail up 8%.
Two-wheeler wholesale sales soared 25% annually to 1.8 million units, and over the first 10 months of FY26 (April-January), overall wholesale growth stood at 6.7%. Retail two-wheeler sales benefited from Pongal and Makar Sankranti festivities, wedding demands, and rising consumer purchasing power, posting a robust 20.8% annual increase.
Looking ahead, ICRA forecasts 6-9% growth in domestic two-wheeler sales for FY26, supported by replacement demand post-GST reductions, gradual urban consumption recovery, and rural income gains. Electric two-wheelers shone brightly, with retail sales reaching 123,012 units in January—a 25.3% year-on-year leap.
As India’s auto sector navigates economic headwinds, these trends signal resilience and potential for sustained expansion, bolstered by policy tailwinds and evolving consumer preferences.